379 F.

2d 803

C. W. BRENNAN, Appellant,
v.
Stewart L. UDALL, Secretary of the Interior, Appellee.
No. 8722.

United States Court of Appeals Tenth Circuit.

June 22, 1967.

Fred M. Winner, of Winner, Berge, Martin & Camfield, Denver, Colo.

(John J. Silson, of Whiteford, Hart, Carmody & Wilson, Washington,
D.C., William S. Livingston, John D. Knodell, Denver, Colo., and
William E. Rollow, Washington, D.C., with him on the brief), for
appellant.
S. Billingsley Hill, Atty., Dept. of Justice, Washington, D.C. (Edwin L.
Weisl, Jr., Asst. Atty. Gen., Lawrence M. Henry, U.S. Atty., and David I.
Shedroff, Asst. U.S. Atty., with him on the brief), for appellee.
Before PICKETT and SETH, Circuit Judges, and CHRISTENSEN,
District judge.
PICKETT, Circuit Judge.

The appellant Brennan owns 160 acres of land in Rio Blanco County, colorado,
which, after having been classified as a valuable source of petroleum and
nitrogen, was in 1917 patented to George H. Baxter, reserving to the United
States 'all the nitrate, oil, and gas in the lands', and required by 30 U.S.C. 121123.1 In 1963 Brennan, together with Humble Oil and Refining Company,
holder of an option to purchase the land, petitioned the Director of the Bureau
of Land Management for a decision that oil shale was not included in the
reservation. The Director, with the approval of the Assistant Secretary of the
Interior, held: 'It is clear that it was the intention of the parties to allow patent
by reserving the oil shale to the United States and that the appropriate
reservation of 'oil and gas' includes oil shale.' Thereupon Brennan brought this
suit seeking a review of the administrative determination, a declaratory
judgment, and an injunction restraining the Secretary of the Interior from

asserting any claim adverse to the ownership of Brennan in the oil shale
deposits in the land. The United States District Court for the District of
Colorado held that the reservation included oil shale and denied the relief
sought. Brennan v. Udall, 251 F.Supp. 12. We affirm.
2

It is the basic contention of Brennan that the reservation authorized by the 1914
statute and that contained in the patent does not include 'oil shale.' The crux of
the argument is that the term 'oil', as used in mineral land statutes and in the
Baxter patent, refers to a liquid hydrocarbon mineral capable of migrating in its
natural form and does not embrace a deposit of oil shale, which is a solid
mineral containing no oil, although petroleum may be produced by a process of
destructive distillation which converts organic materials in the rock into liquid.
The Secretary admits that the term 'oil' ordinarily defines a liquid, while oil
shale is a rock usually of an origin different from that of oil and is composed of
a mixture of compounds which are insoluble in oil solvents.2 It is conceded that
oil shale as a rock, unlike coal, has little intrinsic value. Its value at the time of
the classification in 1916, and now, is solely as a possible source of oil. The
Secretary states that the real distinctions between oil in liquid form and oil
shale are the mode of occurrence and the method of recovery, which accounts
for Congress and the Department of the Interior treating them, on some
occasions, as separate and distinct. The Secretary contends that from the time of
the enactment of the 1914 statute, the Department of the Interior has treated the
term 'oil' as used in the statute and in the patent reservations as including oil
shale, that Congress has taken no action affecting this treatment, and that under
these circumstances the courts should accept the Department's determination.

There is little, if any, dispute in the material facts. During the year 1907 Baxter
entered upon the land involved here and in 1909 made a formal homestead
filing. At the time of entry and filing, the land was considered non-mineral and
so designated by Baxter in his filing. The 1914 statute authorized agricultural
entry upon mineral lands, but required a reservation to the United States of the
minerals named therein. On May 23, 1916 the Director of the Geological
Survey notified the Commissioner of the General Land Office of the great
potential for petroleum in the oil shale deposits of Colorado, Utah, and
Wyoming, and accordingly classified the tracts, including the Baxter entry, as
mineral lands 'valuable as a source of petroleum and nitrogen, * * *.'3 Shortly
thereafter, following the instructions of the Commissioner, the local land office
noted the classification on their tract books. On November 22, 1916, Baxter
was advised that the date for the taking of final proof in connection with his
homestead entry had been fixed, and enclosed was a form designated as a
'Petroleum Waiver.' The waiver provided:

'I, * * * hereby apply to have my entry considered as made under the Act of
July 17, 1914 (38 Stat. 509) and hereby consent that the patent issued to me
thereunder shall contain the provisions, reservations, conditions and limitations
of the said act.'

Baxter executed the waiver and the patent issued shortly thereafter. Nothing
further occurred concerning the reservation until the aforesaid request to the
Director of the Bureau of Land Management in 1963.

At the outset, the Secretary challenges the jurisdiction of the court because the
relief sought seeks to diminish the title of the United States in the lands,
consequently it is a necessary party and has not consented to be sued. We agree
with the trial court that the decision of the Secretary of the Interior adversely
affects Brennan's title to the land in question and is reviewable under the
Administrative Procedure Act. 5 U.S.C. 1009, (now 701-706). Coleman v.
United States, 9 Cor., 363 F.2d 190, 191; Adams v. Witmer, 9 Cir., 271 F.2d
29; Denison v. Udall, D.C. Ariz., 248 F.Supp. 942; Stewart v. Penny, D.C.Nev.,
238 F.Supp. 821. Cf. Homovich v. Chapman, 89 U.S.App.D.C. 150, 191 F.2d
761.

The Department of the Interior's determination that oil shale should be reserved
under the 1914 Act was first disclosed by the 1916 classification which was
based exclusively upon the findings of the geological survey that the oil shale
deposits of Colorado, Utah and Wyoming were valuable as a source of
petroleum and nitrogen. On May 10, 1920, the Secretary of the Interior advised
the Commissioner of Public Lands that oil shale was accepted as prima facie
evidence of the value of lands classified for mining purposes, so as to require an
agricultural entryman to accept restricted patents under the provisions of the
1914 Act. 47 L.D. 548. To the same effect was the decision of Dennis et al. v.
State of Utah, 51 L.D. 229 (1925). In 1927 the Department recognized that a
valid mining claim to oil shale deposits could be made on lands where the
homestead patent had reserved to the United States the 'oil and gas.' James W.
Bell, 52 L.D. 197. See also Smallhorn Oil Shale Refining Co. et al., 52 L.D.
329 (1928), which referred to an order issued in 1918 by the Commissioner of
the General Land Office. That order provided, in part:

'It has been noted that the main product of oil shale is oil. The department is of
the opinion that the word 'oil' as used in the act of July 17, 1914, may properly
be construed to include oil shale, and under such construction the reservation in
Crampton's patent is sufficient to reserve to the United States the oil shale
deposits in the patented land.'

Union Oil Co. of California, 61 I.D. 106 (1953) followed the Bell case, stating
that it had been 'consistently followed for some 30 years, therefore it should not
be changed in the course of adjudication except for compelling reasons,' citing
Luckenbach Steamship Co. v. United States, 280 U.S. 173, 182, 50 S.Ct. 148,
74 L.Ed. 356.

10

Although the position of the Department of the Interior has varied over the
years as to the form of the reservation in patents embracing oil shale lands, it is
abundantly clear that for fifty years it has consistently construed the 1914 Act
to authorize the classification of lands containing oil shale deposits as a
valuable source of petroleum and nitrogen and to require the reservation of such
deposits when patents are issued. The Department's construction of the statute
has been made a matter of public record on numerous occasions. It is
significant that in the Baxter patent reservation, and in many others, the term
'oil' was used, although there was no evidence of the presence of oil except that
recoverable from the oil shale. We conclude that the Department of the
Interior's interpretation of the meaning of the term 'oil' as used in the 1914
statute and in the patent reservations is reasonable, and the courts must
therefore respect it. Udall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d
616, reh. denied 380 U.S. 989, 85 S.Ct. 1325, 14 L.Ed.2d 283; Unemployment
Compensation Comm'n of Territory of Alaska v. Aragon, 329 U.S. 143, 67
S.Ct. 245, 91 L.Ed. 136. Cf. State of Wyoming v. United States, 10 Cir., 310
F.2d 566, 580, cert. denied 372 U.S. 953, 83 S.Ct. 952, 9 L.Ed.2d 977.
Furthermore, at all times since the 1914 Act, Congress has not seen fit to
interfere with the Departmental construction of the 1914 statute. Practices of
the Department of the Interior with respect to oil shale under the 1914 Act were
brought to the attention of Congress when the Mineral Leasing Act of 1920, 30
U.S.C. 181 et seq., was considered, and in 1956 when the 1914 Act was
amended to simplify the procedure established by the Bell decision, supra. S.R.
2524, 84th Cong.2d Sess. (1956); U.S. Code Cong. & Admn. News p. 3391.4 It
is obvious that throughout the years Congress knew that the Department of the
Interior had construed the term 'oil', as used in the 1914 Act and in many of the
patent reservations, to include oil shale deposits, and it apparently accepted the
administrative determination. At least it did not consider the interpretation as
being contrary to the statute. Cf. Boesche v. Udall, 373 U.S. 472, 482, 83 S.Ct.
1373, 10 L.Ed.2d 491. The patent in the Bell case had reserved only the 'oil and
gas' in the lands. If the reservation did not include oil shale, the mineral locator
claiming the oil shale had no valid mineral claim, and the 1956 amendment
was meaningless so far as Bell was concerned. Nor can there by any doubt but
that Baxter knew in 1917 when he executed the consent to the issuance of the
patent under the 1914 Act that because of the existence of the oil shale deposits
the lands had been classified as a valuable source of petroleum and nitrogen,

and he made no objection to the reservation.

11

Finally, Brennan contends that Baxter, having entered upon the land prior to
the enactment of the 1914 statute, was entitled to a patent free from any
reservations. It is argued that when a homesteader enters upon land and
complies with the conditions imposed by statute, he is entitled to a patent
vesting title in him as of the time of a valid entry upon the land, citing Knapp v.
Alexander-Edgar Lumber Co., 237 U.S. 162, 35 S.Ct. 515, 59 L.Ed. 894, and
Ard v. Brandon, 156 U.S. 537, 15 S.Ct. 406, 39 L.Ed. 524. These cases involve
conflicts between the entrymen and third parties and were not concerned with
statutes directing withdrawal, classification or the reservation of mineral rights
prior to final proof of the homesteader upon which a final certificate and patent
would issue. Prior to submitting his final proof, which was subsequent to the
1916 classification of the land as a valuable source of petroleum and nitrogen,
Baxter freely consented that his entry be considered as made under the 1914
Act and that the patent, when issued to him, should contain the reservations
provided for in that Act. At that time he had the right to show that the lands
were non-mineral in character and receive accordingly an unrestricted patent.5
Instead, he chose to accept the patent with the reservations, and an attack upon
it by his successors in interest almost fifty years after its issuance comes too
late. Wetzel v. Minnesota Ry. Co., 169 U.S. 237, 18 S.Ct. 307, 42 L.Ed. 730;
Snauffer v. Stimson, 81 U.S.App.D.C. 110, 155 F.2d 861; Adair v.
Shallenberger, 7 Cir., 119 F.2d 1017; United States v. Nudelman, 7 Cir., 104
F.2d 549, cert. denied 308 U.S. 589, 60 S.Ct. 115, 84 L.Ed. 493; American
Bond and Mortgage Co. v. United States, 7 Cir., 52 F.2d 318, cert. denied 285
U.S. 538, 52 S.Ct. 311, 76 L.Ed. 931.

12

Affirmed.

30 U.S.C. 121 provides:

'Lands withdrawn or classified as phosphate, nitrate, potash, oil, gas, or
assphaltic minerals, or which are valuable for those deposits, shall be subject to
appropriation, location, selection, entry, or purchase, if otherwise available,
under the nonmineral land laws of the United States, whatever such location,
selection, entry, or purchase shall be made with a view of obtaining or passing
title with a reservation the United States of the deposits on account of which the
lands were withdrawn or classified or reported as valuable, together with the
right to prospect for, mine, and remove the same; but no desert entry made
under the provisions of this section and sections 122 and 123 shall contain more
than one hundred and sixty acres. All applications to locate, select, enter, or

purchase under this section shall state that the same are made in accordance
with and subject to the provisions and reservations of the abovementioned
sections. July 17, 1914, c. 142, 1, 38 Stat. 509.'
2

The parties stipulated:

'Petroleum, oil shale and coal are all hydro-carbon mixtures, usually containing
other elements, such as sulphur, nitrogen and oxygen. The organic materials in
oil shale called 'kerogen', as well as the organic materials in coal, are largely
insoluable in oil solvents, such as benzine, ether, etc., while petroleums are
essentially completely soluble therein. Each of these mixtures is a mixture of
compounds, each compound having an individual chemical formula, but none
of the three groups has a specific formula. However, although oil, oil shale and
coal may contain the same elements, they are not chemically combined in the
same manner in the three substances.'

The duties of the Director of the Geological Survey are set forth in 43 U.S.C.
31(a)

Senate Report 2524, 84th Cong.2d Sess., regarding H.R. 6501, reads, in part:
'Under the Department of the Interior decision in the case of James W. Bell (52
I.D. 197 (August 1927)) the owner of a valid mining claim located before
February 25, 1920, on lands covered by the 1914 act, in order to obtain a patent
to the minerals, is required to acquire the outstanding interest of the surface
owner and thereafter to execute a deed of reconveyance to the United States;
subsequently, a mineral patent to the land, including both the surface and the
minerals, is issued to the mining claimant. From 1946 to 1955, inclusive, 71
mining claims, including 67 oil shale claims, were issued under this procedure.
The committee is informed that in a few cases mining claimants have been
unable to obtain the cooperation of the owners of the surface estate and have
been prevented thereby from obtaining patent to the mineral estate.'
At a hearing before the Subcommittee examining this proposed legislation,
Representative Aspinall of Colorado, who introduced the bill, stated:
'As it now stands, if a mining claim exists on a leasable mineral under land
upon which a non-mineral surface right has been granted under the Act of July
17, 1914, the only way this valid right can be taken to patent is for the mining
claimant to obtain and reconvey to the government the surface title. After this,
the mining claim can be granted and patented and the surface right can be
reestablished. Thus, if the surface owner refuses to cooperate in this process,
the mining claimant is left with a valid right-- but a right foreshortened by his
inability to obtain patent. * * *

In my own area, this (Act) would affect mining claims for oil shale, a mineral
or oil bearing rock reserved under the leasing laws. * * *
The law of 1914 which provides for the reservation of minerals and patents to
be issued at that date did not make it possible to gain a patent on mineral claims
which were validly entered into between 1914 and 1920. In my district there are
a few cases-- and we do not know how many but there are a few of them-where there is a valid existing mineral claim to oil shale where there was also a
patent on the surface rights of the same land. In one particular case the owner
of the surface rights through a patent issued by the government has refused to
reconvey any surface rights to the government so that the government then
could issue a new patent including the minerals in the area, and thereby permit
the new patentee to give a deed to the owner of the surface lands.' * * *
5

The Departmental Regulation, dated March 20, 1915, relating to the 1914 Act
in effect at the time, provided, in part:
'(b) Under this proviso, persons who have located, entered, selected, or
purchased lands subsequently withdrawn or classified as valuable for such
mineral deposits, are allowed the privilege of showing, at any time before final
entry, purchase, or approval of selection or location, that the lands are in fact
nonmineral in character. * * *
'A withdrawal or classification will be deemed prima facie evidence of the
character of the land covered thereby for the purpose of this act. Where any
nonmineral application to select, locate, enter, or purchase has preceded the
withdrawal or classification and is incomplete and unperfected at such date, the
claimant not then having obtained a vested right in the land, must take patent
with a reservation or sustain the burden of showing at a hearing, if one be
ordered, that the land is in fact nonmineral in character and therefore
erroneously classified or not of the character intended to be included in the
withdrawal. * * *'